The true test of when a technology has become mainstream is when it is being widely used across the whole business, from customer-facing functions to backroom work. Analytics has been customer-focused for some time, and has also been widely used for individual performance, for example, by sports teams. The advent of “people analytics,” or analytics used to improve human resources (HR) management, suggests that we are accelerating towards mainstream use. But does everyone understand the full potential of people analytics?

I caught up with Milo Faccenda of BID Company, a SAS partner, to understand how and why HR managers are using analytics to improve company performance.

Milo, what would you say is driving this change?

There is a growing recognition that HR can benefit from analytics just like any other part of the business. In fact, thanks to analytics HR can support other functions as a Business Partner. HR has always been a complex area, and there is plenty of evidence that there is scope for improvement. For example, did you know that interviews are not much better than flipping a coin as a selection tool? We always think of them as the gold standard, but half an hour to an hour is not really enough to find out about someone. We also know that hiring the wrong person can be extremely costly in terms of the effect on customers and other staff. It’s not surprising that companies are eager to try people analytics as a way of improving these processes.

How are companies using analytics for the main HR functions, recruitment for example?

One of the earliest, and probably simplest, ways is to sift through CVs. This is probably the most time-consuming part of the hiring process, but algorithms like our CV analyser can be used to sort through CVs and sift them. This takes a lot of the pain out of the process, not to mention speeding it up considerably, and therefore reducing the cost. Other algorithms can search social media for suitable candidates, identifying them by keywords, or even profile suitable candidates. An insurance comany, for example, discovered that communication skills were more important than a university curriculum. There are also predictive ways to identify high-performing employees, and those most likely to leave, as well, both of which are crucial to employee satisfaction and engagement and business performance.

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This makes it sound very easy! What are the challenges to using people analytics?

The biggest challenge is being able to access the right data to make smarter decisions. This is both an internal and an external issue. For example, going back to recruitment, for sifting to work effectively, you need to be very clear about what skills you need from your candidates. If you don’t have that information, the sift will not be effective. HR and recruiting managers both need to focus on the most essential skills. More widely, in improving staff performance – and motivating staff effectively is a key HR function – you need to understand what makes people successful in your organisation, and then use that information to drive your decisions about your performance and reward systems.

And of course you also have to measure success?

Yes, that’s the next challenge. You need good data about your own performance, to ensure that you can justify what you’re doing. As W. Edwards Deming said, without data, you’re just another person with an opinion! You can start with the simple stuff: number of people interviewed, number of CVs read, number of days the post is open and so on, and then move on to more sophisticated analytics.

Of all the functions, HR is perhaps most closely associated with people. How do you make the link between people and analytics processes?

You’re right – people are crucial. Algorithms certainly can’t make hiring decisions by themselves, or improve employee engagement! They are becoming increasingly sophisticated, and are actually getting very good at predicting behaviour, but they are at their best in partnership with people. The key is that analytics can make it easier for HR professionals to do their jobs, by using the vast quantity of data that is available to help them to understand what’s happening, and then using those insights to drive decisions. It’s just like in any other area of the business, but some of the insights are people-related.

Thanks for your insights, Milo.

Learn more about how to combine internal and external data to create a 360-degree view of an employee’s skills and competencies. Sign up for this on-demand webinar.